Financial Services, Tax and ESG survey

PwC has conducted a survey of financial services (FS) businesses across the banking, asset management and insurance sectors to ascertain the current level of maturity regarding ESG (Environmental, Social and Governance) and tax across the industry. This report details the findings from the survey, highlighting areas of significant progress and identifying potential gaps and vulnerabilities. We then look at what a strategy for tax and ESG might look like – and how to turn theory into practice.


ESG is a framework that measures not only the impact of the three ESG factors on an organisation's performance but also the wider impact that an organisation has on the planet, people and the broader community.

Historically, the tax implications of the ESG agenda have focused primarily on tax transparency. However, there is now a wider appreciation for the myriad of ways in which tax and ESG are interlinked and present opportunities for value creation within a business, including:

  • consideration of tax in a business’ wider sustainability reports;
  • ensuring robust tax governance frameworks are in place to ensure the organisation’s tax affairs are being managed in a manner consistent with its broader purpose and strategy; and
  • assessment of the impact of green taxes and incentives on the business at a corporate and product level.

Tax is a crucial part of the environmental, social and governance conversation for financial services businesses at a corporate and product level. Tax is both an ESG consideration in its own right and an issue with significant implications for each constituent part of the ESG agenda:

Environment – tax is now a fiscal tool used to drive sustainability activities in businesses. Carbon pricing measures, environmental taxes such as plastic packaging tax, and taxation of resources and pollution are all designed to encourage businesses to embrace sustainability.

Social – there are tax implications across a range of social issues. For example, employment taxes will be affected by the move to a more remote and digital workforce and the rise of the “gig” employment model. This wider agenda also encompasses issues including diversity and inclusion fair pay and supply chain visibility.

More broadly, the question of whether companies are paying their “fair share” of tax is attracting growing scrutiny and businesses should be prepared to face greater challenge on any aggressive tax planning undertaken.

Governance – there are increasing numbers of mandatory obligations being levied on boards in relation to the articulation of their tax strategy and various other aspects contributing to overall tax transparency. Financial services businesses must be able to provide reliable tax information for ESG ratings, including for their products.

The pace of change in the breadth of tax relevant ESG regulation is high (see further detail in the report). Taking action now to ensure the business is in a position to navigate these regulations is key. Taking an approach of "waiting for the dust to settle" poses the risk of missing opportunities, and falling behind competitors in building trust with stakeholders. Now is a time for action.

Key findings

The survey showed that the financial services sector still has some way to go in understanding and addressing the linkages between tax and an organisation’s ESG agenda.

The key takeaways from our report are:

  1. There is a lack of integration of tax within the organisation's wider ESG strategy
  2. There is limited awareness within FS organisations of tax’s impact on the execution of an organisation’s ESG agenda
  3. FS organisations often have not assigned clear responsibility for tax ESG matters internally
  4. Businesses recognise the imperative to improve tax transparency but are slow on the uptake

To take this forward, it’s important for organisations to define their own level of ambition with regard to tax and ESG at the outset, before building out a value bridge and implementing a roadmap to enable the business to reach and maintain their target state.

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Elizabeth Stone

UK Asset and Wealth Management Leader, Partner, PwC United Kingdom

Tel: +44 (0) 207 804 9678

Emma de Waal

Manager, PwC United Kingdom

Tel: +44 (0)7841 073853